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30-08-2019, Rozelle Sales & Services, Section 148, 147, 133(6),Tribunal Kolkata

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4 months 2 weeks ago #10679 by amit
Section - 148, 147, 133(6), 263, 68
Order Date - 30-08-2019
Favouring - Assessee
Court - Tribunal Kolkata
Appellant - Rozelle Sales & Services Pvt. Ltd.
Respondent - ACIT
Justice - J. Sudhakar Reddy, AM & S.S. Godara, JM
Citation - 919Taxpundit9
Appeal No. - I.T. A No. 2030/Kol/2018
Asstt. Year - 2010-11


PER : S.S. Godara, JM

1. This assessee’s appeal for assessment year 2010-11 arises against the Principal CIT, Central-1, Kolkata’s o der dated 30-08-2018 revising the regular assessment/reassessment framed in its case on 30.11.2017 thereby directing the Assessing Officer to frame afresh assessment, exercising revision jurisdiction in proceeding u/s. 263 of the Income-tax Act, 1961 ( in short ‘Act’).

Heard both the parties. Case file perused.

2. We start with basic relevant facts. This assessee is a non-banking finance company “NBFC” in short. It carries out investments and trading in shares as well. The assessee its return declaring total income of Rs.1,01,260/- on 28-09-2010. The same stood summarily processed.

3. The assessment/re-assessment order dated 30-11-2017 forming subject matter. The impugned 263 proceedings reveals that the department had carried out a search dated 25-08-2015 in M/s. Ghanshyam Sarda Group of cases. It noticed therein that Shri Gopal Sarda had controlled and managed the assessee NBFC. The assessee had raised total share capital of Rs. 5 crores during the relevant previous year. One Shri Suresh Kumar Pansukha’s got recorded his statement during the course of the said search admitting himself to be an entry operator controlling and managing a number of shell/jamakharchi companies. He further deposed that has companies M/s. P.R Niryat Pvt. Ltd, Suman Vanijya Pvt. Ltd and Urch Traders Pvt. Ltd. Had invested in shares of M/s Nillampathy Tracon Pvt. Ltd & M/s. Rozelle Sales & Services P.Ltd . The Assessing Officer noticed in this factual backdrop that one of assessee’s (seventeen) shares subscriber was M/s Urch Traders P.Ltd. He, therefore, framed reasons to before us this back drop of facts that the assessee company had ploughed back unaccounted income as share capital thereby giving rise an instance of the taxable income having escaped assessment. He set into to motion section 148/147 proceedings vide reopening notice served on the assessee on 30.03.2017

4. Case file suggests that the assessee filed its return on 20.04.2017 in response to section 148 notice. The Assessing Officer then issued section 133(6) notice to all of the assessee’s subscriber companies. Thirteen out of said seventeen investors replied to his notice. His notices issued to M/s. Sumangal Developers P.Ltd., Nice Commotrade P.Ltd, Urch Traders P.Ltd and Dream Goods P.Ltd., which came back unserved with remark “Left “.. The Assessing Office then called for the assessee to file their fresh addresses. He again issued notices to all of four of them. Three of the said investors except M/s. Urch Traders P. Ltd filed replies.

5. The Assessing Officer found during the course of reassessment that the assessee had received a sum of Rs.55 lakhs as share capital subscription from M/s. Urch Traders P.Ltd. The assessee in turn could not produce the said investor party. The Assessing Officer quoted the all the foregoing facts to conclude that assessee’s share capital coming from M/s. Urch Traders P.Ltd was in fact its unaccounted income routed through a shell/jamakharchi entity whose genuineness and credit worthiness had not been proved. He therefore treated the above stated share capital subscription of Rs. 55 lakhs as unexplained cash credit u/s. 68 of the Act.

6. Case file reveals that the PCIT sought to revise the above re-assessment on the ground that the same was erroneous causing prejudice interest of the Revenue. He took note of entire factual backdrop observed that assessee’s investors had either no income or very nominal income(s) in their returns as the against respective investments made in its share capital. And that the Assessing Officer had made no further enquiry as to how these companies had invested heavy amounts. The PCIT further alleged that the Assessing Officer had accepted assessee company’s share application subscription without physical verification by way of a full enquiry despite the fact that they had not existed on the given addresses for carrying out their business activities. The PCIT has accordingly revised the impugned re-ass ssment as follows:-

“5. Considering the above decision of Hon'ble I TAT, Kolkata, Bench-B which is also jurisdictional tribunal, I find that the case of the present assessee is a fit case for revision u/s.263 because in its case also, the AO has made inadequate enquiry to verify the genuineness of share capital despite the premium in this case being much more higher i.e.,Rs.490/- per share as compared to Rs.190/- per share in case of Subhlakshmi Vanijya Pvt. Ltd (supra) and that too, such a high premium has been paid by all the 17(seventeen) companies despite the fact that the assessee company is incurring losses. Despite there being a clear finding by the search team that all the shareholder companies are paper/jamakharchi companies, the AO has only relied upon making of verification by issuing notices u/s.133(6} and not making any field enquiry to ascertain genuineness of these shareholder companies. The pattern to provide funds by these paper/jarmakharchi companies is similar to what has been analyzed by the vs. Commissioner of Income Tax-1, Kolkata (supra) because ali these shareholder companies do not have any significant source of income but they have made investment of huge amount of money in share capital of the assessee company only by circulation of capital from one company to another company.

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